When it comes to running a small business, taking care of your employees is crucial. Offering health insurance and other employee benefits can go a long way in fostering a healthy and motivated team. According to KFF, the Kaiser Family Foundation, in 2022, about half (48.7%) of the population nationwide received their health insurance through an employer.

For those in a dozen states, the percentage was even higher. Statista says that since 1987 the percentage of the U.S. population with employment-based health insurance has ranged from a low of 54.3% in 2021 to a high of 65.1% in 2000.

So, what should you consider when shopping for health coverage? We have a few suggestions.

7 Things to Consider When You’re Shopping for Employee Health Coverage

When you’re discussing health insurance options with insurers, brokers, and others make sure to carefully review what each plan covers and doesn’t cover.

A high-quality plan that will help you attract and retain employees should include:

1: Comprehensive coverage: Affordable Care Act (ACA) compliant plans must include “essential health benefits” (EHBs), such as:

• doctor’s services
• inpatient and outpatient hospital care
• prescription drug coverage
• pregnancy and childbirth
• mental health services

 (Visit HealthCare.gov for a detailed list of what the ACA says are essential.)

2 + 3: Wellness benefits and preventive care services: The ACA includes these services as well as chronic disease management. Details on preventive health services for all adults, women, and children are also summarized on HealthCare.gov. Annual exams, immunizations, and screenings are typically included, too.

Wellness benefits may vary by plan. Many include free or discounted gym memberships, stress management resources, smoking cessation programs, biometric screenings, and more. Ask your broker about what’s available through the health plans or programs you’re considering.

4: Telemedicine services: With telehealth benefits, enrolled employees and dependents don’t have to drive to a doctor’s office or clinic to receive care. They can visit with a health care professional online when are sick.

5: Mental health and substance abuse coverage: Again, federal law mandates that certain mental health and substance abuse care must be offered under ACA-compliant plans.

6: Other coverage choices: Though options vary, you may be able to offer your employees options for coverage beyond health care. Your broker may offer supplemental or voluntary insurance options for Dental, Vision, or other benefits. The CaliforniaChoice exchange gives employees the opportunity to purchase Dental, Vision, Chiropractic and Acupuncture, and Life Insurance coverage. There’s also coverage for Accident Insurance, Critical Illness Insurance, Hospital Indemnity coverage, and Legal Plans available through the CaliforniaChoice Member Marketplace and MetLife.

7: Options to help employees save: You can help your employees save on taxes and reduce their out-of-pocket expenses. Offer a Flexible Spending Account (FSA) or Health Savings Account (HSA). Both help employees save for qualified medical expenses. HSAs have higher contribution limits and allow employees to carry funds over from year to year. However, they are available exclusively to those with an HSA-eligible High Deductible Health Plan. An FSA is a “use it or lose it” account. If an employee does not spend all funds in the account during the plan year (or a grace period, if available), money is forfeited.

ACA Affordability

Since the Affordable Care Act (ACA) became law, Applicable Large Employers (ALEs) with more than 50 full-time or full-time equivalent employees have been required to offer employees health insurance. A full-time employee is one who works 30 hours or more weekly.

ALEs must offer health insurance that is “affordable.” It must also provide minimum value to 95% of full-time employees and their children (through age 26). If a business does not offer affordable, minimum value coverage, it is subject to penalties. If an organization does not offer any coverage, a different penalty applies for each full-time employee minus the first 30. An article about 2024 penalties can be found on The ACA Times website.

For 2024, coverage is “affordable” if the employee cost does not exceed 8.39% of household income. The percentage is determined annually by the Internal Revenue Service. It was 9.78% in 2020, 9.83% in 2021, 9.61% in 2022, and 9.12% in 2023. It started at 9.5% in 2014.)

Less Than 50 Employees?

Even if you don’t have 50 or more full-time or full-time-equivalent employees, you might still want to offer health insurance. It can reduce employee turnover, help employees stay healthy, and keep them on the job. It can also boost productivity and employee morale.

How to Shop for Health Insurance

When you’re shopping for employee health insurance, you have multiple options:

• Shopping on your own
• Shopping with the assistance of a broker or insurance agent
• Buying coverage directly from an insurance company
• Buying coverage through the state’s public exchange, Covered California for Small Business
• Buying coverage through a broker, including the state’s private exchange, CaliforniaChoice

One of the advantages of a public or private exchange is giving employees access to multiple health insurance plans to address their individual or family health insurance needs. Covered California for Small Business offers plans from three insurers: Blue Shield of California, Kaiser Permanente, and Sharp Health Plan.

The CaliforniaChoice private exchange includes dozens of coverage options from eight different insurers and health plans. Employees can choose from:

• Health Maintenance Organization (HMO) coverage
• Preferred Provider Organization (PPO) plans
• Exclusive Provider Organization (EPO) options
• Health Savings Account (HSA) eligible plans

There are eight participating health plans in CaliforniaChoice. Availability differs based on each employee’s residential address and each health plan’s service area.

• Anthem Blue Cross
• Cigna + Oscar
• Health Net
• Kaiser Permanente
• Sharp Health Plan
• Sutter Health Plus
• UnitedHealthcare
• Western Health Advantage

With a Group Health Plan, you and your employees share in the cost of the premium. Your employees may pay less through your employer-sponsored plan than they would for an individual or family health plan.

Another advantage is that there is no medical underwriting for groups in California of up to 100 employees.

California Individual Mandate

A final reason to consider in offering health insurance to employees is the California Individual Mandate. That’s the requirement that most Californians must either have qualifying health insurance or pay a penalty with their state income taxes.

For the 2023 tax year (paid in 2024), the California penalty for not having health insurance is $900 per adult and $450 for dependent children under 18. A family of four without insurance for a full year faces a penalty of $2,700. The penalty amount is based on how long an individual or family is without health insurance.

Talk With a Broker

As you consider health insurance benefits for employees, a good place to start is by talking with a broker. A broker can provide you with information about public and private exchange options as well as commercial health plans serving your area. Be sure to ask about provider networks, coverage options, costs, and value-adds that may be available. There’s no obligation and no cost for a quote.

If you don’t have a broker, we make it easy to search for one.